Under the first free trade pact China will sign with a country in continental Europe, the Asian country will allow 84 percent of Swiss exports to be duty-free, Assistant Minister of Commerce Yu Jianhua told a press conference on Monday.

"In the first year, we will cut import duties on (Swiss watches) by 18 percent and then by around 5 percent annually in the following years," Yu said. "They will be cut by 60 percent in 10 years."

The agreement, which should be signed when Switzerland's Economy Minister Johann Schneider-Ammann visits China in mid-July, will bring retail prices of Swiss watches in China down, but it is difficult to say by how much exactly, Yu said.

Vontobel analyst Rene Weber said Swiss watches in China were subject to an import tax of 11 percent and a luxury tax of 20 percent on watches costing more than 1,500 Swiss francs ($1,600). There is also a value-added tax.

Fabrice Coffrini | AFP | Getty Images

"If the import tax is cut by 18 percent, the rate would fall to 9 percent from 11 percent. This wouldn't lead to lower prices and only have an impact on margins," Weber said, adding the development was nevertheless positive.

Exane BNP Paribas analyst Luca Solca said he believed the current slowdown in demand was driven by consumer mood.

"I wonder if the duty reduction can be enough to switch this - but it can certainly help move things in the right direction," he said.